Microsoft to acquire TikTok

Microsoft has emerged in recent days as the leading suitor for the fast-growing but embattled social media app TikTok. What the company may be buying is a big headache.

 

The tech giant said it would continue negotiating toward a purchase of the short-video-sharing service amid President Trump’s attempts to ban from the United States or wrest control of TikTok, which is owned by a Chinese company. The president’s concerns ostensibly revolve around security, particularly the threat — real or imagined — that the Chinese government may gain access to TikTok’s valuable data on American citizens.

 

Mr. Trump on Monday blessed Microsoft’s pursuit of some of TikTok’s assets, including versions of the app that are available in the United States, Australia, Canada and New Zealand. If Microsoft or another “very American” company fails to reach a deal to bring TikTok in the U.S. under local control by Sept. 15, Mr. Trump said, he will force it to shut down.

 

TikTok offers a steady stream of user-made videos, featuring everything from dance moves to cooking tips to piano-playing cats to movie re-enactments, most clocking in at less than a minute. The app is wildly popular with teenagers and young adults and is backed by software that delivers videos to users matching their interests. It’s great fun.

But what would staid old Microsoft, purveyor of Windows and Excel, get out of this deal? Instant access to a demographic that has largely bypassed it.

 

The company would, though, also be taking on all of the hassles and dangers that come with running a social media service: hate speech, misinformation, trolling, nudity, copyright infringement. Interspersed with TikTok’s largely anodyne content are growing far-right communities, white supremacists and Covid-19 misinformation.

TikTok has said it removed 49 million videos for various reasons in the last half of 2019, compared with about 15 million taken down by its much larger rival YouTube. Like Facebook, TikTok has formed an outside group to help police its content.

 

“Microsoft is buying itself real aggravation,” said Gigi Sohn, a former Federal Communications Commission senior adviser and a fellow at the Georgetown Law Institute for Technology Law & Policy. “There’s no reason hate speech and misinformation won’t just keep growing.”

 

Whether or not TikTok funnels personal information to the Chinese government, its collection of data like locations, internet addresses and private messages rivals that of Facebook, The Washington Post has reported. India banned the app over privacy concerns, and Secretary of State Mike Pompeo has raised similar concerns. In part to quell that unease, TikTok has hired an American chief executive and says data is stored only in the United States and Singapore.

Microsoft so far has declined to comment on its interest in TikTok beyond a blog post over the weekend assuring users that information collected from TikTok would be kept in the United States, and data housed elsewhere would be deleted.

 

The company would need to do much more than that to protect users. Though Facebook, YouTube and Twitter have deployed artificial intelligence software and hired thousands of content moderators to take down vile or misleading posts, dangerous content inevitably slips through. Recently, a video spreading bogus claims about the value of using hydroxychloroquine to treat Covid-19 racked up millions of views on YouTube, Facebook and Twitter and was shared by members of the Trump family before being taken down.

 

Microsoft has little experience in the tricky and subjective art of corralling a social media site. It bought LinkedIn for about $26 billion in 2016, but that’s a reliably sober platform. If the company is successful in snapping up TikTok’s U.S. operations, and its roughly 100 million American users, Microsoft should immediately beef up TikTok’s policies with a clear, aggressive code of conduct of its own — and then actually enforce that policy.

 

If YouTube, Facebook and Twitter are any indication, Microsoft would have to defend itself against significant criticism from both sides of the political aisle about unevenly enforced policies. Does the company have the wherewithal to ramp up content removal or blocking of users when it might anger a key political or business ally — or a TikTok star?

 

TikTok users already have demonstrated their might, including claims to registering en masse for tickets to President Trump’s Tulsa, Okla., rally that they never redeemed.

 

There are, of course, serious matters of international diplomacy to consider in this deal. There’s also the concern that, despite vehement denials by TikTok’s parent, ByteDance, the Chinese government may now or in the future collect and analyze the reams of data that the app culls from its roughly 800 million users. In the United States, senators, Mr. Trump’s cabinet and, apparently, Amazon all have developed a mistrust of the service.

 

“While TikTok isn’t immune to the challenges that all platforms face, the fact that our users come to express their creative sides immediately makes TikTok a much more uplifting environment than one might experience on other platforms,” a company spokeswoman, Jamie Favazza, said in a statement. Ms. Favazza noted that TikTok forbids posting misleading information about elections and removes content that violates its policies, and she reiterated that ByteDance doesn’t share data with the Chinese government.

 

Microsoft has a perfectly profitable business without TikTok, meaning the potential scrutiny must be worth it to score tech’s most coveted prize: data, data, data. The investment firm Cowen Group estimated the coveted 18- to 24-year-old demographic averages nearly an hour a day on TikTok, compared with 44 minutes on Instagram and 36 minutes on Snapchat. And TikTok could be worth $200 billion to Microsoft in just three years, estimates Wedbush Securities.

 

Microsoft has longed to be one of the cool kids of tech. Last week it was left out of a House antitrust subcommittee hearing where the chief executives of Facebook, Google, Amazon and Apple were peppered with questions about a host of issues, including bias, post removals and their ever-shifting policies. Cool or not, buying TikTok just might get Microsoft into that hot seat.